The average cost of goods sold in the restaurant industry varies, but the cost of goods sold percentage is between 28% and 32% of revenue. Instead, total inventory count is used to calculate COGS.Īverage Cost of Goods Sold Restaurant: Industry Average This would be too difficult and time-consuming. COGS is not measured for each individual dish or drink sold. What Is Cost of Goods Sold in a Restaurant?Ĭost of goods sold in a restaurant is the cost to make all the drinks and food sold during a given time period.
Measuring COGS allows restaurateurs to track their spending on ingredients and adjust purchasing or pricing as needed. These costs are measured separately and are used in conjunction with COGS to find the prime cost of a restaurant and other important metrics. COGS does not include other operating expenses like utilities, wages, or other overhead expenses. What Is Cost of Goods Sold?Ĭost of goods sold is the total cost of all materials or ingredients used to produce an item.
COGS MEANING HOW TO
We'll run you through the cost of goods sold, how to measure it, and give you the tools to succeed on your own. Without these measurements, running a successful business is nearly impossible and you'll end up a part of the restaurant failure rate. It's important to learn how to manage cost for restaurant business. These two numbers show the total percentage of a restaurant's expenses that are dedicated to food and beverage inventory. Cost of goods sold, or COGS, is an integral measurement that helps a restaurateur increase restaurant sales and ensure restaurant or bar profitability.Ĭalculating COGS is also a vital step in finding a restaurant's food cost and liquor cost. Running a successful restaurant or bar requires a thorough grasp of accounting principles. Do you know your restaurant's cost of goods sold? How about how much do bars make in relation to the COGS? You should.
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